Australia Sri Lanka Double Tax Agreement – An Overview
The Australia Sri Lanka Double Tax Agreement is a bilateral agreement between Australia and Sri Lanka that seeks to eliminate the double taxation of income and capital gains arising in both countries. The agreement also provides for the prevention of fiscal evasion through the exchange of information between the two countries.
The agreement was signed on 27 November 2013 and came into force on 12 January 2015. Since then, it has been an important tool in promoting trade, investment, and economic cooperation between Australia and Sri Lanka.
Elimination of Double Taxation
One of the key benefits of the agreement is the elimination of double taxation. This means that individuals and businesses operating in both countries will not have to pay tax twice on the same income or capital gains. Instead, they will be subject to tax only in the country where the income or gains are sourced.
For example, if an Australian business has a branch in Sri Lanka and earns income from that branch, it will be subject to tax in Sri Lanka. However, it will not be subject to tax on the same income in Australia.
Prevention of Fiscal Evasion
The agreement also provides for the prevention of fiscal evasion. This means that both countries will share information about taxpayers to ensure that they are paying the correct amount of tax. This will help to prevent individuals and businesses from avoiding or evading tax by shifting income and assets between the two countries.
Investment and Economic Cooperation
The Australia Sri Lanka Double Tax Agreement also helps to promote investment and economic cooperation between the two countries. By providing certainty and predictability in the taxation of income and capital gains, the agreement encourages cross-border investment and trade.
This is particularly important for Australian businesses looking to invest in Sri Lanka and Sri Lankan businesses looking to invest in Australia. The agreement provides them with greater confidence and assurance that they will not be subject to double taxation or fiscal evasion.
Conclusion
The Australia Sri Lanka Double Tax Agreement is a key tool in promoting trade, investment, and economic cooperation between the two countries. By eliminating double taxation, preventing fiscal evasion, and providing certainty and predictability in the taxation of income and capital gains, the agreement helps to facilitate cross-border trade and investment. As such, it is an important agreement for businesses and individuals operating in both countries.